Johnston v ANZ [2004] NSWSC 363

Before the Court were two interlocutory motions. Various corporations associated with the plaintiff engaged in rural activities. Indebtedness to the bank was secured by mortgages, mortgage debentures and guarantees. Default occurred. A mediation took place pursuant to the Farm Debt Mediation Act 1994 (the Act) on 28 March 1996. The mediator was a solicitor, Mr Ireland.

A number of respective advisers to the parties attended the mediation as well as the plaintiff, his mother and some bank officials. The plaintiff’s accountant deposed that the final agreement between the parties was an acceptance of what was written on the whiteboard at the conclusion of the mediation. A deed was subsequently entered. It was the plaintiff’s contention that the deed does not represent the whole of the agreement between the parties and that an agreement was also reached and evidenced by items written on the whiteboard but not later included in the deed.

It was common ground that the Act applied and its provisions including the confidentiality provision for mediation sessions in s15.:

By the Farm Debt Mediation Amendment Act 2002 a further subsection was added to s 15:

“(3) This section does not apply to the following documents:

(a) Heads of Agreement,
(b) a contract, deed, mortgage or other instrument entered into as a result of, or pursuant to, Heads of Agreement.
(c) a summary of mediation under section 18A.”

There was dispute between the parties as to whether this amendment is applicable to the issues between them.

On 22 June 2002 the plaintiff issued a wide in terms subpoena for production of documents which was served on Mr Ireland. Given the descriptions, it was obvious that much material sought would be rendered inadmissible in any proceedings by s 15. The bank brought a motion to set aside the subpoena and the Plaintiff brought a motion to access the relevant docs and get an affidavit from Mr Ireland and subpoena him. 

There was no dispute between the parties that the deed would be admissible in proceedings and not inhibited by s15. The deed does not represent a document prepared for the purpose of or in the course of a mediation session, rather it evidences an agreement reached after the conclusion of the mediation.

Recognizing that there could be some obscurity surrounding what might be meant by the expression “in the course of the follow-up of a mediation session”, construction should be adopted which would prevent undermining of an obvious objective of the Act. Otherwise a party could reach an agreement, refuse to abide by it and preclude the tender of its terms

Provided what is evidenced is an agreement reached after the mediation session it does not matter whether the agreement is evidenced in one document or more than one, nor if part of the agreement is evidenced by a deed under seal and some additional agreement reached recorded separately. It was a situation such as the latter which was the contention of the plaintiff here.

It was submitted that the words of s 15 as they stood prior to the addition of s 15(3) would preclude tender of the “supposed other agreement”. This was a reference to what was said to have been recorded on the whiteboard and transcribed by Mr Ireland. There is no statutory inhibition against post mediation agreements being evidenced in multiple documents.

The crux of the problem was that, while there was ample evidence that Mr Ireland made notes, there was no evidence as to what was in them, save the broad contention of the plaintiff that what was written on the board were terms of agreement which might reasonably be inferred to have been transcribed. If the writing on the board can be properly categorized as evidencing progress towards agreement as distinct from the agreement itself, that would be inadmissible. However, if it records a post mediation agreement, it is, not inadmissible by reason of s 15. If what was recorded on the board were in effect notations of negotiations as distinct from agreement, then the record would be inevitably caught by the exclusion provisions.

The Court concluded that, if Mr Ireland’s notes include a transcription from the whiteboard of the terms of an agreement, that document was amenable to production on subpoena and the plaintiff should not be restrained from access to it.

Here, the present subpoena lacked specificity, sought material which was plainly inadmissible in proceedings having regard to the statute and, because of the width of its terms, it was set aside.

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